Are Your Current Clients Restricting Your Revenue Growth?Mar 09, 2021
Long ago, when I was a young twenty-something, my first dive into entrepreneurship was a mint-condition comic book delivery service. Yes, I was (and still am) a total comic book nerd--and apparently, I wasn’t the only one!
Within a few months of launching, I had accrued a massive list of customers. But the more I grew, the tighter my business got. Winning lots of new customers was exciting as a young business owner, but realizing my margins were thin… well, that wasn’t.
That experience taught me something that I still hold to 30-something years later (I’ll let you guess just how many years) and it’s this: beware the trap of locking in any prospect that comes your way. Especially when times are tight, I’ve seen too many business owners:
- Unnaturally bend and adapt their own business model to fit a prospect’s need
- Lock themselves into contracts that take too much time and too many resources
- Take a step backwards in the quality and size of client they’ll accept
Today, I want to strengthen your resolve to say no more to misfit deals and clients that limit your ability to grow. You don’t want them, your business can’t afford them, and now, you’ll be better equipped to spot them.
Spotting the Misfits on Your Current Client List
When I talk about building a target prospect profile with a coaching client, I always start with this question:
If you could clone your three best clients, who would they be and why?
Now, right off the bat, I need to emphasize what I did NOT say. I did not say “your biggest client”. I did not say “your most important client”. I said “your best client”. Because when it comes to revenue growth, your best client is the only one that should matter.
If you’re a smaller business, you probably know this to be true: no matter how good the money is, your largest clients are always a headache. They make more demands, consume more time and resources, and squeeze you on price more than your other clients.
You might have just signed an exciting amount of revenue, but you quickly find yourself unable to grow beyond your current ceiling because of how tied up your resources are serving such a big client.
Here’s the truth: the best “building blocks'' aren't necessarily the biggest ones.
Your best clients are the ones that are the most profitable, manageable, and replicable. They’re the ones that will actually boost your ability to grow your business in the long run.
Cloning Your 3 Best Clients
So, now that we’re on the same page about what I mean by best clients, let’s get clarity around who your ideal, growth-friendly clients are. By doing so, you’ll be taking an important step towards unblocking your revenue growth. Let’s get started:
- If you were to clone your three BEST clients, who would they be? (I want you to stop and really answer this – what are their names? I want you to think back even over the last 5 years – who were those stand-out clients?)
- Once you have those specific clients in mind, what exactly do you like about each one? Was it the kind of work you do with them? Who you interface with on their team? How do they contribute to your business growth?
As you think about these questions, did they share any common traits? Do any of those traits affect your long term capacity for growth, not just your day to day life?
These are the kinds of questions that help you paint a clearer picture of what kind of client your business needs to grow. To help take your reflection a few steps further, I’ve got a few key areas to look for when.
Ideal Clients Produce Peace of Mind
Imagine you wanted to build an addition on your house. You have ideas, energy, and enough money set aside for the project – but you’re constantly concerned something is going to go wrong with your existing house. Maybe there’s a leaky pipe that you think might burst, or your neighbor's tree is leaning and it might fall on your garage. Who knows!
What’s my point? It’s hard to focus on new growth when you’re constantly having to spend valuable time, attention, and money on putting out fires with your existing client base.
If they’re consuming too much of your focus and resources, then they probably just aren’t a good fit for your business. It might be time to rework a contract, or if needed, say goodbye and move forward.
Ideal Clients Align with your Resources
Have you ever seen an NFL lineman? They’re enormous, powerful, and surprisingly fast. It makes them the best at what they do. But line him up as a wide receiver? Not quite the same – although he would probably be tough to tackle…
The attributes that make a lineman effective in his position don’t necessarily translate well to another role on the field. Likewise, your business isn’t going to be the best fit for every client either.
Now, I’m sure you know this as “head knowledge”, but the key is resisting the temptation to bend your business a little too far to accommodate a client that might not be the right fit.
Currently, do you have any clients that are difficult to accommodate because of what they need from you or how they need it done? You might find that this kind of client is an attention-drain that prevents you and your team from opening up your capacity.
Ideal Clients Provide Growth-Value in Return
Let’s talk about the tale of two clients. One is worth $100,000 a year in revenue and they’re a good fit for your business – but they’ve never brought you new business. The other client is worth $50,000 a year, is also a good fit – but they’ve introduced you to another 2-3 businesses like theirs.
If you had to pick one, which would you choose?
Obviously, the one that brings you more referrals--which means “referrals” should be part of your “ideal customer” criteria. I like to call these kinds of clients “gatekeepers”. They’re individuals or businesses that are well-networked with larger pools of your ideal clients!
Here’s a great example – a digital marketing agency started doing some work for a CPA firm, and the project went fairly well. That CPA firm was well-networked with other small business owners who fit this agency’s ideal profile, and started referring those business owners to the agency. What did the agency owners do? As you probably guessed, they started intentionally targeting CPA firms.
I find that if you can intentionally identify, prospect, and pursue these opportunities, you set yourself up for exponential growth.
Ideal Clients Build Your Reference-ability
Now, acknowledging we just talked about the importance of revenue, referrals, and other sound business principles, there’s one that can be a little bit of a grey area for some business owners. I’m talking about reference-ability.
Reference-ability allows you to point to a well-known brand and say you contributed in some way to their work. At Value Prop, we can say that we helped train the east-coast staff at Salesforce on their sales system. Now, they were far larger than our ideal client, but it’s a big name that makes ears perk up, right?
Reference-ability can be tricky because it often means setting aside everything that we just talked about with ideal clients. I’ve seen a lot of business owners sacrifice other sound business principles to get reference-ability from big names. It might set them back a few steps if it’s not an ideal client fit, but hey, at least they’ve “been there, done that, and got the t-shirt”.
So how do you decide if the juice is worth the squeeze? If you think the “big name” would mean something to your ideal clients (the ones that are actually going to build up your business), then it might be worth it--if it’s a temporary project that won’t bleed you forever.
There is a great deal of value in social proof, and your ability to say “We helped _____” can be a massive benefit if (and only if) your prospect looks up to a company like the one you named. If they don’t? Take the flattery, but turn them down.
What’s the Takeaway?
If you’re nodding in agreement as we’ve walked through these attributes of an ideal customer, don’t stop there. When you get a moment, sit down with your client list. Hold up these four criteria against each one:
- Do I have peace of mind about working with this client?
- Is my business well-designed for their specific needs?
- Do they provide additional growth value like referral access?
- Do they build my credibility in a space I want to grow in?
If you have clients that don’t meet these criteria to a moderate extent, it might be time to restructure some contracts or, if needed, let some clients go so that you can focus on building a better client base for your business.
Remember, at the end of the day, it’s not about the biggest building blocks. It’s about the best.